Peer effects and endogenous social interactions

This paper proposes a solution to the problem of endogenous selection peers in linear-in-means model. We do not require specify model for how comes about. Rather, we exploit two restrictions that are inherent many such specifications construct conditional moment conditions. The question link decisions involve given individual all independent one another, but they made between other pairs individuals located sufficiently far away network. These conditions imply instrumental variables can be constructed from leave-own-out networks.